Retail REITs Report Higher Rent Collections

Shopping Center REITs closed 2020 on a high note. According to recent filings analyzed by S&P Global Market Intelligence, all 10 shopping center REITs that have filed reports in the last two weeks had increased rent collections from 89% to 95%, showing improvement in the retail market.

Kite Realty Group Trust and Outlet Center REIT Tanger Factory Outlet Centers led the market with each REIT collecting 95% of its base rent in the fourth quarter, followed by Retail Properties of America and SITE Centers, which had 94.1% and 94% rent collections respectively. Macerich was in the middle of the pack with 92% rent collections, while Simon Property Group and Federal Realty Investment Trust had the least with 90% and 89% in total collections.

Retail REIT rent collections have been volatile since the beginning of last year. After the initial impact from the pandemic, rent collections picked up through the summer months and improving through October, when collections finally surpassed 90%, according to research from BTIG. However, in November—as COVID-19 cases surged and some regions went back into lock down—rents faltered. According to research from Datex Property Solutions’ tenant track report, rent collections fell .41% from October to November.

Even during the upswing from May through October, rent collections were bifurcated by tenant type. Grocers and other essential retailers, like pharmacies, paid nearly 100% of rent payments, for example. According to the most recent data from S&P Global, single-tenant retailers have also outperformed shopping centers with collections in this segment ranging from 94% to 100%. Alpine Income Property Trust collected 100% rent in the fourth quarter; Four Corners Property Trust and Agree Realty collected 99.6% and 99% of rents, respectively; Spirit Realty Capital collected 94% of rents for the fourth quarter; and National Retail Properties reported 95.7% rent collection. Likewise, casino REITs also outperformed the retail market, reporting 100% rent collections in the fourth quarter.

Retail REITs weren’t alone. Rent collections surged across asset classes at the end of the year. Office was another standout. Paramount Group Inc. collected 96.7% of rents in the fourth quarter with 98% of collections coming from office tenants. Empire State collected 96% of its rent from its office tenants, and Vornado reported total office rent collections of 97% from office tenants in the fourth quarter.